In anticipation of another decade coming to an end, I began to ask people within the industry where they were 10 years ago, and what has changed for them and the industry. I remember being corporate sponsor for my company’s Y2K initiative in 1999. The world was worried that all computers would crash when the date changed from 1999 to 2000. Seems pretty far-fetched now, doesn’t it? I also remember my absolute love for all things PowerPoint and I had become addicted to my Blackberry, even though I had to carry a separate cell phone. Some of you I asked talked about early and ineffective real estate web sites with too much Flash and not enough content. You mentioned the importance of print advertising, the difficult switch from MLS books to MLS sites, the resistance to change. There was talk about consolidation within real estate boards as well as brokerage companies and brands in 1999. Some of you were just getting into the business as early adopters of technology. Some of you were still in school, and a career in real estate was something you would have laughed at.
A decade ago we found ourselves in an entirely different kind of real estate market. Mortgage rates were running as high as 8 percent in some markets and sales were happening so quickly that there literally weren’t enough houses to go around. Today, the average 30-year fixed rate is 4.87 percent and there is 6.5 months worth of inventory – more than enough to choose from.
But there are similarities to be drawn. In 1999, rising mortgage interest rates and declining inventory helped to slow the market in many regions. Although it’s exactly the opposite today – we’re plagued by increasing inventory and fewer buyers – the slowdown allowed agents and brokers to reflect on the industry and begin to develop best practices to sustain themselves, their companies and the industry moving forward.
In 1999, that meant just beginning to familiarize oneself with the Internet’s capabilities and implications for real estate. About 30 percent of home buyers were looking to the Internet to help them search for a home but they had to go to many sites to gather all of the information. That is likely why that percentage only increased 2% from 1996, the year many real estate companies launched their first sites. That number seemed momentous at the time,. but, by comparison, today more than 90 percent of home buyers start their search on the Internet.
With consumers finding more and more information on their own, agents over the last decade have had to adjust the kind of services they provide in order to ensure they continue to add value. As an industry, we are finally embracing the aggregation of information for the consumer rather than hiding it.
Of course social media was not even a blip on the radar in 1999. We would have laughed if someone suggested we would conduct business on sites like Facebook and Twitter. Today they are increasingly becoming a major part of our day-to-day work as real estate agents, broker owners and brands. In fact, about 35 percent of us actively use social media and about 50 percent are using social media in some form. Social media has the potential to significantly impact the manner in which we do business, becoming as prolific as the Internet has in the last decade.
The biggest difference of course is that 1999 was by all accounts a record-breaking year for home sales. 2009 was not. Nearing the end of 1999, 1.78 million existing homes were available for sale, representing 4.3 months of supply at the then present sales pace. In 2009 the sales pace was 6.5 months, which was far better even than the previous three years. The average home was on the market for just five weeks or 35 days in 1999, as compared to 76 days in 2009.
1999 was a better year for consumers as well. According to the Conference Board, the index of consumer sentiment rose to 141.4 in December 1999. At the time it was the second-highest reading ever and was well above analysts’ forecasts of 135.8. Consumer sentiment in December 2009 was an incredibly weak 73.4, although encouragingly rose more than 13 points over November numbers.
Today we are still addicted to our Blackberries (and IPhones). We still overuse PowerPoint. Not all of us have decided to embrace change. There are still too many Real Estate Boards and MLS’s. There are too many real estate agents and not enough home buying and selling consumers. And, not surprisingly, there are more real estate brands than there were 10 years ago. But there is opportunity. As we leave 2009 behind and embrace 2010 we have a lot to work with. We have technological tools we would never have dreamed of. We have a huge wave of new buyers and sellers that will enter the market in the months and years to come. We have low rates and temporary incentives. We have attitude. And most importantly we are armed with the knowledge and understanding of how to overcome challenges. I would say that is a pretty powerful tool kit.